Four Israeli women died in a gun attack
However, Israeli radio reported that the army was already building its forces around Jenin, the Palestinian town that Sunday's attackers came from.
The pullouts from Bethlehem and neighbouring Beit Jala are to be test cases for Israeli withdrawals from the four other towns it entered - Jenin, Qalqilya, Ramallah and Tulkarm.
A BBC correspondent says Bethlehem was quiet when the last Israeli tank rolled out, leaving parts of the town looking like a war zone.
Several houses close to Manger Square had been destroyed, he said.
Israel moved forces into and around the six Palestinian-run towns and cities in the West Bank on 17 October in response to the assassination of Israeli Tourism Minister Rehavam Zeevi.
At least 40 Palestinians have died in clashes since then.
US role
The United States, which has been trying to calm a year of Israeli-Palestinian violence as it pursues its military campaign in Afghanistan, is pressuring Israel's Prime Minister Ariel Sharon to withdraw from the remaining towns quickly.
But in a possible sign that troops may stay put for some weeks, a visit to the US scheduled for Mr Sharon in early November has been postponed.
BBC Middle East analyst Roger Hardy says Mr Sharon cannot be sure what the situation in the West Bank will be next week, when he originally planned to go Washington.
If he visited the White House at a time when Israeli forces were still occupying Palestinian towns he could expect a hostile reception.
The Israeli military offensive has led to unusually strong condemnation from senior US officials and has strained US-Israeli relations.
Sunday attack
Sunday saw two Palestinian gunmen kill four women and wound up to 14 others in the coastal city of Hadera, north of Tel Aviv, hours after an Israeli soldier was shot dead in the same area.
The militant Palestinian group Islamic Jihad said in a videotaped statement that its men - who fired at random from a car before being shot dead by police - carried out the attack.
Hadera is at one of Israel's narrowest points, just a few kilometres from the West Bank, and it has frequently come under attack by Palestinian militants.
Ambulances raced to the scene following the attack. The area was closed off.
One of the women died on the spot, while three others died in hospital, Israel radio said.
Palestinian condemnation
"I heard bursts of fire and I thought it was lightning," eyewitness Yaakov Roth-Levy, who watched the attack unfold from his balcony, told the Associated Press news agency.
"I saw two people sitting with bowed heads and one lying on the ground. A red car was being fired on. I saw the terrorist fall out of it."
The Palestinian leadership has issued a statement condemning the attack.
The Israeli soldier was killed by gunmen linked to Palestinian leader Yasser Arafat's Fatah faction in retaliation for Israel's killing of one of its militants.